French business activity stagnates in March as services weaken: PMI

[PARIS] Activity in France's private sector failed to accelerate in March as the dominant service sector stagnated despite another round of price-cutting, a widely watched survey of business managers showed on Tuesday.

Data compiler Markit said its Purchasing Managers Index (PMI) for services rose in March to 49.9 from 49.2 in February, failing to break the 50-point threshold dividing an expansion in activity from a contraction. That was also worse than the rise to 51.2 Markit had initally reported.

Markit's overall PMI index, which includes both services and manufacturing, rose to 50.0, an improvement from the 49.3 reported the previous month but not as good as the 51.1 originally reported.

"There remains little sign of the stagnancy lifting - although business expectations rose to the highest since last August, they remain subdued in historical terms," Markit economist Jack Kennedy said.

Hotels and restaurants, which have suffered since the Islamist attacks that killed 130 people in Paris cafes, a concert hall and a stadium last November, remained the weakest services, Markit said.

That was despite the fact companies engaged in another round of price discounting in March, a trend seen in the French private sector for four years now.

However, the picture of stagnation painted by the survey contrasted with more positive hard data published in the last few weeks.

French consumer spending unexpectedly surged in the three months to February, surpassing a peak reached five years ago, before the eurozone debt crisis. Industrial output also rose strongly in January.

REUTERS